John Cochrane of the University of Chicago and Stanford said it succinctly:
Once upon a time, the minimum wage, like free trade, was a basic test of whether you were awake in the first week of econ 1. We put a horizontal line in a supply and demand graph. Minimum wages increase unemployment of poor people.
Yes, that fact was once considered so obvious that, if I recall correctly, both the Washington Post and the New York Times editorialized against the minimum wage. Any minimum wage.
Harvard’s Greg Mankiw asks a salient question:
There is one question I would like to see some reporter ask Alan Krueger, the president’s chief economist: How did they decide that $9 per hour is the right level? Why not $10 or $12 or $15 or $20? Presumably, the president’s economic team must believe that the adverse employment effects become sufficiently large at some point that further increases are undesirable. But what calculations led them to decide that $9 strikes the right balance?
Quite a few years ago, Scott put it more colorfully: If you really think you can legislate wealth, why are you so cheap? Why don’t you make the minimum wage $100 an hour?
Unless the law of supply and demand has been repealed, increasing the price of anything will reduce the demand for it. That is one of the rationales for the tax on cigarettes. That was why, in the bad old days, countries would impose tariffs on foreign goods. The minimum wage is a tariff on low-skilled workers. It inevitably will reduce employment, unless it is pegged at a level that is less than low-skilled workers are already receiving, in which case it will be more or less harmless. I believe that is, in general, what has happened in recent years: the federal minimum wage has trailed actual earnings upward, so that it hasn’t done a great deal of harm.
Still, there are some people who simply can’t create enough value to justify a $9 dollar an hour wage. Some of them could earn $8 an hour, or $7.50, and would be eager to work for those amounts. But the Democrats want to consign those people to forced unemployment by making it illegal for them to work. They should be ashamed of themselves.
What is going on here is that the Left is out of ammo. Their policies have been tried, and once again have failed. Liberals, the smarter ones anyway, know that their policies don’t work, but they don’t care: they desperately cling to power, at any cost. They have nothing left to offer but demagoguery, which means that the next four years are going to be ugly.